Winter 2018 Kansas Grain and Feed Association 816 SW Tyler Topeka, KS 66612 (785) 234-0461 ksgrainandfeed.org ASSOCIATION STAFF Ron Seeber President & CEO Tom Tunnell CEO Emeritus Randy Stookey Senior Vice President General Counsel Staci Storey Vice President Chief Financial Officer Shahira Stafford Vice President Government Affairs Shari Bennett Vice President Event Planning Samantha Tenpenny Director of Member Services Lisa Anschutz Senior Director of Internal Operations Mitzi Dodds Executive Administrative Professional Trae Green Director of Communications and Marketing
CONTENTS
3 4 6 8 9
President’s Letter Embracing the Challenges Shooting for Success An Expo to Remember Association Happenings Protecting our State’s Interests Legislative Action Day Members Lobby Legislators Membership News Anschutz Celebrates 30 Years
BOARD OF DIRECTORS Glen Hofbauer Chairman Jeremy Girard Vice Chairman Bob Tempel 2nd Vice Chairman Pete Goetzmann Immediate Past Chairman Gary Beachner Deb Clark Brad Cowan Brent Emch Andrew Fullerton James Jirak Ryan McCoy David Helfrich Mark Paul Russ Ronnebaum John Van Meter Clark Wenger
10 12 14 18 19 4
12
Education Tomorrow’s Agribusiness Leaders Capitol Analysis What We’re Seeing at the Capitol Where’d They Come Up with That Number Tax Experts Provide Analysis Don’t Miss Out Mark Your Calendars Safety Tips and Reminders
Shooting for Success An Expo to Remember
Capitol Analysis What We’re Seeing at the Capitol
The Kansas Grain and Feed Report is published quarterly for the members, friends and affiliates of the Kansas Grain and Feed Association. Mail contributions to KGFA, Attention: Trae Green, 816 SW Tyler, Topeka, KS 66612. The KGFA team welcomes your comments, contributions and suggestions. Annual subscriptions for members can be purchased for $25. © 2018 KGFA. View each newsletter online at ksgrainandfeed.org/printnewsletters.
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
President’s Letter: Embracing the Challenges Dear KGFA Members Late last year, I assumed the duties of the Kansas Grain and Feed Association’s president and CEO. Established in 1896, the leaders of this storied organization could be counted on one hand. I am the sixth. It goes without saying that accepting this role is an Ron Seeber incredible honor, blessing, and President & CEO undertaking. It is a position that I see through a lens of an impressive history and unbridled potential. Since my launch in this role, I have been told by countless individuals that I have “big shoes” to fill from my predecessor. That is certainly an understandable perception and, by many accounts, true. But the reality of the situation is that we are facing many sizeable challenges in this industry; and checking my shoe size is the least of my worries. More aptly, the question should be metaphorically, “Am I, and KGFA equipped with the proper tools to make sure the shoe fits?” The answer is an emphatic yes. Whether it be haphazard legislation and regulation from our nation’s capital, to a rogue legislative chairman going after our livelihood at the statehouse, to a woefully ignorant county commission that doesn’t understand that rural Kansas is often dusty and noisy, this is a challenging job. That is why I am blessed to receive a Kansas Grain and Feed Association from a leader in Tom Tunnell that is not only structurally and financially strong, but also
vivacious and employs the most talented team in the business. More importantly, I inherit a membership that embodies all that is great in Kansas and our country. KGFA consists of men and women I’ve had the pleasure to know well over the last decade. A class of people that only ask for a level playing field among competitors; and that government laws and regulation be reasonable and rational. Our industry is constantly evolving, where mergers, acquisitions and federal policies often pit one member against another. It’s also an industry where long-lasting, time honored relationships can disappear in the blink of an eye when a business decision is implemented. These are the norm rather than an outlier. It is a volatile industry, but it is reality. Therefore, with your help and the KGFA team, I will continue to accept change not only as the standard, but will embrace it as an opportunity. Moving forward, Kansas Grain and Feed Association will continue to be agile, relevant and adapt accordingly. As the new president and CEO of the premier agribusiness trade association in the country, this is a challenge I embrace and relish. While we won’t always have the immediate answer for a problem, I can guarantee the KGFA team and I will always be seeking a solution. As always, please don’t hesitate to reach out to me with your concerns and suggestions. God Bless,
Ronald C. Seeber
Winter 2018
3
KANSAS GRAIN AND FEED ASSOCIATION
An Expo to Remember After nearly a year of tireless planning and preparation, the 2017 Kansas Agri Business Expo was held Nov. 15-16 at the Century II Convention Center in Wichita. The theme, “Shooting for Success” turned out to be a reality as vice president of event planning, Shari Bennett, sold the trade show floor to capacity with 159 exhibitors.
Roberts recorded comedic segments on their working relationship with Tunnell from their offices in Washington, D.C.
Thursday morning’s recognition breakfast featured keynote speaker, Kris “Tanto” Paronto, sponsorship awards, the Tomorrow’s Agribusiness Leaders graduation ceremony and two special This year’s Expo also featured surprises for Tunnell. Kansas a member-focused retirement Grain and Feed Association and party for longtime president and Kansas Agribusiness Retailers CEO of Kansas Grain and Feed Association awarded KFSA for its Association, Tom Tunnell. What is generous $30,000 sponsorship normally the Chairmen’s Reception donation. KGFA chairman, Glen on Wednesday night morphed Hofbauer, awarded Kansas Grain into a Tribute to Tunnell, nearly 40 Inspection Service, Kansas Soybean years in the making. The 260 in Commission and Kansas Wheat KGFA Chairman, Glen Hofbauer (Left), KARA Chairman, Clark Pearson and Tom Tunnell cut the attendance Wednesday evening with a Founder Sponsor trophy for ribbon to begin the 2017 Expo. all shared laughs and stories of their $7,000 sponsorship donation. their run-ins with Tunnell. Included Dustin Kuntz and Michael Spade in the tribute were speeches from Wednesday and Thursday. Mama received the “Standing T.A.L. Award” Mike Torrey, Dave Warrington, Gary Lou accomplished feats of strength award for outstanding service and Beachner, Doyle Pearl, Glen Hofbauer like crushing apples with her biceps, dedication to Tomorrow’s Agribusiness and Clark Pearson. Unable to attend rolling frying pans, picking up a Leaders. due to prior obligations, current United sack of potatoes with her tongue Next, as a surprise to Tunnell, States senators, Jerry Moran and Pat and shredding phone books with her association staff played a video in 4
Grain and Feed Report
Exhibitors and attendees alike also enjoyed Mama Lou: American Strong Woman’s performances on
bare hands. Mama Lou even called audience members up on stage to a challenge at who could rip a phone book in half faster.
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
The 95,000 square-foot Trade Show Floor was filled to capacity.
Kris “Tanto” Paronto spoke about his experience in Benghazi, Libya.
which all nine staff members recorded a personal thank you to their leader. After the video, Tunnell also was bestowed the Sunflower Award by Kansas Grain and Feed Association. The Sunflower Award is Kansas Grain and Feed Association’s most prestigious award, given annually to recognize someone who has made a significant and notable contribution to the industry and/or the association. Following the awards ceremonies Paronto took the stage to a standing ovation. A United
States veteran and private security contractor, Paronto has served his country for more than 18 years. He was a United States Army Ranger, 2nd Battalion, 75th Regiment and 5th Battalion, Special Forces Group. Paronto later served as a security contractor for the Central Intelligence Agency and the company Blackwater Security. Paronto helped fight off an insurgence in Benghazi, Libya on Sept. 11, 2012 when assailants attacked the compound of U.S. ambassador Chris Stevens. “Tanto” as he is affectionately known in military circles spoke for an hour on effective leadership traits he honed while in the military. Paronto signed the books The Ranger Way and 13 Hours in Benghazi for nearly two hours after his speech. On Thursday evening, comedian C. Willi Myles captured the crowd with his clean comedy act.
Myles cracked jokes for 45 minutes on his upbringing, the cold weather in Minnesota and how the people of Kansas changed the Arkansas River’s name to arKANSAS River. The 2018 Kansas Agri Business Expo is slated for Nov. 14-15 at the world-class Hyatt Regency Hotel and Century II Convention Center.
Tom Tunnell (left) was presented the Sunflower Award by Glen Hofbauer. Winter 2018
5
KANSAS GRAIN AND FEED ASSOCIATION
ASSOCIATION HAPPENINGS Responsible, Renewable Water On Oct. 11, 2017 Kansas Grain and Feed Association hosted a meeting for the Milford Lake Watershed Project. The project, spearheaded by the Kansas Water Office under a Natural Resources Conservation Service initiative called the Regional Conservation Partnership Program, began early discussions of preventing nutrient runoff within the Milford Lake watershed.
Making Our Water Last Ron Seeber and Randy Stookey both participated in the 2017 Kansas Governor’s Water Conference on Nov. 8 and 9. The conference annually groups scientists, water managers, state and federal officials and legislators, city and county administrators, environmental organizations, irrigators and citizens. The goal of the conference is to find ways to sustain Kansas’ water supply. Stookey is pictured left with Earl Lewis of the Kansas Water Office. Photo courtesy of Kansas Water Office.
Providing the Vision On Nov. 8, 2017 Ron Seeber and Trae Green attended one of the Kansas Chamber’s seven regional forums seeking feedback for Vision 2025, the action plan for Kansas. The round-table discussion allowed participants from all industries to provide ideas and suggestions used in the development of the Kansas Chamber’s business and infrastructure goals.
6
Grain and Feed Report
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
ASSOCIATION HAPPENINGS Ottawa Coop Hosts KDHE
Samantha Tenpenny (front, second right), Ottawa Coop’s Clark Wenger, (front), Randy Stookey (front, far right) and elevator staff toured KDHE through grain storage facilities.
On Dec. 18, 2017 Clark Wenger and Ottawa Coop played host to members of Kansas Department of Health and Environment’s (KDHE) air quality division. Wenger and his staff, along with Kansas Grain and Feed Association’s Randy Stookey and Samantha Tenpenny, toured grain storage facilities in Burlingame and Scranton. The in-depth tour featured explanations of concrete storage, ground storage and a steel storage unit. The staff of the Ottawa Coop explained off-loading, storage and loading techniques at each location, as well as methods taken to ensure clean air in the communities.
Logan Hallgren explains a component of the concrete storage facility in Burlingame.
Clark Wenger (center) explained how trains are loaded with grain at Ottawa Coop’s steel storage facility in Scranton.
Clark Wenger explained how grain is unloaded onto a belt and transported into a ground storage unit.
The group toured Ottawa Coop’s new ground storage facility south of Burlingame. Winter 2018
7
KANSAS GRAIN AND FEED ASSOCIATION
LEGISLATIVE ACTION DAY Kansas Grain and Feed Association, in conjunction with Kansas Agribusiness Retailers Association and the Kansas Cooperative Council, jointly hosted the annual Legislative Action Day on January 17. Members and legislators alike filled the Topeka Country Club’s ballroom to capacity during the Kansas Legislature’s second week. Participants began the day with a hamburger lunch and were addressed by House Majority Leader, the Honorable Don Hineman (R-Dighton) and Senate Vice President, the Honorable Jeff Longbine (R-Emporia). Hineman and Longbine spoke fairly freely on issues affecting Kansans. Both provided unique insights into the school funding debate, state tax climate and much more. After lunch, members were encouraged to play the part of lobbyist by taking a visit to the Kansas Capitol and seeking out their elected official in their office. While many legislators were in committee meetings
and were unavailable to speak at the time, some members found it rewarding to see their elected official in a professional setting. “Legislative Action Day is our industry’s megaphone to lawmakers,” KGFA president and CEO Ron Seeber said. “This is an election year and, for some strange reason, politicians tend to listen better because of it. This year, our message was heard loud and clear - even by the legislators with political hearing impairments.” Both legislators and members then returned to the Topeka Country Club for an evening meal of prime rib and networking. The after-hours reception provided an optimal opportunity for members and their elected officials to speak once again. Don’t miss out on your opportunity to see government in action next year. Join us in 2019 for our next Legislative Action Day.
Rep. Steven Johnson, Sen. Caryn Tyson and Ron Seeber pose for a photo during Legislative Action Day’s reception.
Tom Tunnell and Gary Beachner, Beachner Grain, greet Sen. Rick Billinger at Legislative Action Day.
Colby Gantz, D.E. Bondurant Grain Co., Inc., uses a kiosk to find his legislator on Legislative Action Day.
Rep. Susan Concannon and Randy Stookey pose for a photo during Legislative Action Day’s reception.
8
Grain and Feed Report
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
MEMBERSHIP NEWS Update Your Membership Profile
Welcome New Members
Did you move or take a new job? Have a new phone number or email address? KGFA wants to know, and we’ve made it easier than ever to update your membership profile! Visit www.ksgrainandfeed.org and click on Member Directory. Login and make your changes directly online. Forgot your username or password? Email lisa@kansasag. org, and we’ll get it to you!
Thanks to the reputation of our membership and industry, KGFA continues to grow and provide useful products and services for grain handlers. Please welcome Commodity & Ingredient Hedging, LLC (Chicago) and DTN (Hutchinson, Kansas).
Lisa Anschutz celebrated her 30th work anniversary at Kansas Grain and Feed Association this past year. Anschutz is dear to members - and KGFA - for her dedication to the industry and its membership.
Lisa Anschutz Senior Director of Internal Operations
“Lisa’s 30 years of service to our association has been exemplary to say the least,” CEO emeritus Tom Tunnell said. “She was one of two employees I hired in 1987 to facilitate the moving of the association from Hutchinson to Topeka. She was the impetus too, back in those years, for KGFA moving into the computer era. Her legacy as a KGFA staff member will be long-remembered for sure.”
30 Years
Thank You, Lisa
STAFF SHUFFLES
Ron Seeber President and CEO
Ron Seeber became KGFA’s president and CEO on Nov. 15 after serving as the senior vice president of government affairs and working for the association since 2008.
Randy Stookey Senior VP | General Counsel
Randy Stookey became KGFA’s senior vice president and general counsel on Nov. 15 after serving as the association’s general counsel since 2011.
Shahira Stafford Vice President of Gov. Affairs
Shahira Stafford rejoined KGFA on Jan. 2, 2018 as its vice president of government affairs. Stafford previously was KGFA’s vice president of communications for 10 years. Winter 2018
9
KANSAS GRAIN AND FEED ASSOCIATION
EDUCATION OUTREACH ‘Yesterday’s’ Tomorrow’s Agribusiness Leaders The Tomorrow’s Agribusiness Leaders Program – a jointly sponsored initiative of the Kansas Grain and Feed Association and the Kansas Agribusiness Retailers Association – is an intensive leadership development program designed to teach members of the association about state and federal legislative and regulatory processes and how to be a better leader within the industry. At the 2017 Kansas Agri Business Expo, members of the Kansas Grain and Feed Association received trophies of graduation. The T.A.L. participants partook in three sessions, first in Topeka learning the basics of state and federal government. The group then took a trip to Washington, D.C. to see government in action and finally concluded the third session in Wichita before graduation at the Expo.
Glen Hofbauer presented Lance Adams with his T.A.L. Graduation Trophy.
Glen Hofbauer presented Seth Born with his T.A.L. Graduation Trophy.
Clark Pearson presented David Klahr with his T.A.L. Graduation Trophy.
Dustin Kuntz (left) and Michael Spade were presented the “Standing T.A.L. Award.”
The 2017 T.A.L. Class in Washington, D.C., with Senator Pat Roberts.
Recertification In conjunction with the 2017 Kansas Agri Business Expo, several recertification programs were offered. On Nov. 15, Kansas Grain and Feed Association held 7B/4 Recertification - Fumigation and Seed Treatment.
1A Recertification attracted 232 attendants. 10
Grain and Feed Report
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
EDUCATION OUTREACH Tomorrow’s Agribusiness Leaders The 20th class of Tomorrow’s Agribusiness Leaders (T.A.L.) wrapped up its first day of exposure to legislative affairs in the agriculture industry on Jan 16. Five members of Kansas Grain and Feed Association and six members of Kansas Agribusiness Retailers Association convened at the association office in Topeka for a full day of association and government 101. Shahira Stafford, Kansas Grain and Feed Association’s T.A.L. administrator, kicked off the program with a get-toknow-you icebreaker activity at 10 a.m. Association staff followed with introductions to the class and explanations of their roles in the association’s operation. CEO emeritus, Tom Tunnell, provided an intricate history of the association’s past, and structure of the organization. Susan Metzger, Deputy Secretary of the Kansas Department of Agriculture (KDA), joined the group for lunch and fielded questions about KDA’s involvement in the industry.
Next, Stafford and KGFA president and CEO, Ron Seeber, broke down the Kansas Legislature by analyzing several videos and even putting the group through a mock legislative session in order to pass a bill. Later in the afternoon a panel of lobbying experts including: Greg Krissek, Kansas Corn Commission; Aaron Popelka, Kansas Livestock Association; Dan Murray, Devine, Donley & Murray Govt. Affairs; and Eric Stafford, Kansas Chamber answered questions and provided a deeper explanation on the role of a lobbyist. T.A.L. continued the following day in conjunction with KGFA’s Legislative Action Day activities beginning at 7 a.m. with a breakfast with House Speaker Ron Ryckman Jr. Participants were then treated to a tour of the Kansas Capitol and sat in on a Senate Agriculture Committee meeting before looking forward to the second session in Washington, D.C. in July.
COLBY Nathan Beachner Beachner Grain, Inc.
Brandon Dills Co-Mark Equity Alliance
GANTZ
D.E. Bondurant Grain
“
The most interesting thing I learned was the process a bill has to go through to become a law. -- Colby Gantz
Ryan Jones Offerle Cooperative
Taylor Martin Team Marketing Alliance
”
Winter 2018
11
KANSAS GRAIN AND FEED ASSOCIATION
The 2018 Kansas Legislative Session commenced on Monday, January 8. The Legislature has the same makeup as last year with few changes. Kansas continues to represent three parties – conservative Republicans, moderate Republicans and Democrats – with no clear majority. LEGISLATURE’S RESPONSE TO SCHOOL FINANCE LITIGATION After the Kansas Supreme Court deemed last year’s school finance plan unconstitutional, the Legislature is left to respond in one of several ways. Each option seeming worse than the other, this will be the overarching theme by which all other business is considered. While the Governor is proposing an additional $600 million for schools over the next five years, he has not suggested how to finance this increased spending in his budget. In a response to the Governor’s State of the State address, leadership did not hold back their aversion and lack of appetite for such a proposal. A Special Committee on School Finance met during the interim to dissect the Court’s Gannon v. Kansas decision and consider their choices of either raising taxes or cutting spending to comply with the ruling. Some folks are also pushing for a constitutional amendment to “suitable” financing for K-12 public education in Article 6. While an April 30 deadline for a new school finance formula was given, attorneys have advised the Legislature to have their work completed by March 1 to allow time for review, response, and potential revisions should they miss the mark. Again.
S I S Y L
l o t i Cap
A N A
afford
By: S
a St hahir
*To stay current on the latest news from the Capitol be sure to subscribe to our legislative emails and follow us on Facebook and Twitter. 12 Grain and Feed Report
GOVERNOR PRESENTS BUDGET REPORT Kansas is in the second year of its biennial budget for fiscal years 2018 and 2019. Budget Director Shawn Sullivan presented the Governor’s budget report to the House Appropriations and Senate Ways and Means committees during the first week of session. The report highlighted funding proposals or enhancements for K-12 education, aviation, public safety and transportation, higher education, and state government reform. Lawmakers are scratching their heads on how to balance the budget, since the Governor did not offer suggestions for financing the additional $600 million to schools. AG TARGETED TAXES ON THE TABLE In recent years, KGFA has successfully helped stop various ag-targeted tax bills that would have been detrimental to the industry. These bills looked at imposing a sales tax on utilities used for agriculture, eliminating the current sales tax exemption on the purchase of farm machinery and equipment, imposing an excise tax on ethanol, and imposing sales tax on certain professional
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
services. We will continue to oppose legislation that would be harmful to your business. PROPERTY TAXES As the legislature continues to look for additional funding to satisfy the most recent Kansas Supreme Court ruling on K-12 education, there may be an increased focus on property taxes. We will continue to educate lawmakers on property tax issues important to our industry: (1) not increasing taxes on agricultural land by amending the historic “agricultural use valuation” approach; (2) ensuring the continuation of property tax exemption for commercial and industrial machinery and equipment; (3) not allowing local authorities to increase the mill levy for education; and, (4) defending the property tax lid on local government.
to oppose any legislation seeking to increase fees, or create new fees, on our industry for the purpose of increasing the size of the state water plan fund.
vital to maintaining the strong, rural communities in which our industry exists, we will continue to support this legislation.
KANSAS DEPT. OF AGRICULTURE AGENDA KDA has filed a multi-part bill. Two of the items directly affect our industry. One part of the bill amends the Kansas Liming Act to make it unlawful to operate an unregistered manufacturing or distribution facility of ag liming materials. This includes REGULATION FREEDOM- STATE failing to timely file annual registration LEVEL REINS ACT with KDA. Another part of the bill Legislation may be introduced this amends the Kansas pesticide law year to provide greater legislative to authorize KDA to assess a late oversight of costly state agency rules fee against a company that fails to timely renew its pesticide business license. The late fee is 40 percent of the cost of the $140 license (minimum $56). According to KDA, the purpose of these changes is to attempt to lower Ron Seeber Randy Stookey Shahira Stafford administrative costs President & CEO Senior VP | General Counsel VP Gov. Affairs by ensuring each company timely renews its business license.
UTILITY METER FEE FOR SCHOOL FINANCE A draft bill was circulated last year that would have placed a $10 monthly service fee on each commercial utility and water meter. As discussed, there was not a limit on the number of meters on which any one entity might pay. As the proposed idea would have generated approximately $150 million annually, it may be something the legislature might look at again for additional revenue. We stand in opposition to this legislation.
IMMIGRATION We anticipate the introduction of state-centered immigration bills this session. However, we maintain our position that any such immigration policy should be set on a national level rather than a state-by-state basis.
Advocating for
STATE WATER PLAN FUND A portion of the registration fees on pesticides products, and fertilizer tonnage inspection fees, are used to fund the state water plan fund. Last session, bills were introduced seeking to increase those fees, and others, for additional revenue for the fund. Two interim hearings were held specifically on this subject. As our industry fees are already higher than those in our surrounding states, we will continue
YOU
and regulations. The legislation, which mirrors federal legislation, would require any executive branch regulation with an annual economic impact on the regulated community at a certain amount ($2 million) to come before the legislature for an up-or-down majority vote before being enacted. The federal legislation is known as the REINS act. We stand in support of this proposal. AD ASTRA RURAL JOBS ACT Last year, legislation was introduced to create the Ad Astra Rural Jobs program. This legislation was an initiative which would have helped provide revenue for expanding businesses, creating jobs, and growing the local economy in rural areas of our state. As good jobs are
OUR RADAR:
OTHER ISSUES ON
Grain Indemnity Fund - Ensuring proposals from other states to create a grain warehouse indemnity fund doesn’t make its way to Kansas. Ag Lien Central Registry - Protecting against legislation to create a central registry for agricultural commodity liens to replace the current system of prior notification for grain elevators. State Elevator Inspection Program - Fighting efforts that would create a state-level inspection criteria and licensing program for all personal elevator systems used in a commercial building across the state. Winter 2018
13
Where Did They Come Up With
$
THAT
NUMBER By: Jarrod Kieffer and Marc Kliewer
Special to KGFA 14
Grain and Feed Report
of strong drink. It can make “ Beyouwary shoot at tax collectors ... and miss. ” -- Robert Heinlein
In late February or early March of this year, you will be receiving property tax valuation notices from your county appraiser. Knowing how your county appraiser estimated the value of your grain storage and handling facilities can help you determine whether you should appeal the valuation. We encourage regular communication with your county appraiser outside of the appeal process to know what assumptions are being used to value your facilities. Each year before you receive the valuation notice, you should obtain and familiarize yourself with the appraiser’s grain elevator worksheet (“Worksheet”). If you wait to obtain this information at the “informal meeting” referred to in the valuation notice, then you have initiated an appeal, and you will be held to the strict time deadlines specified by Kansas law. Now here are some of the issues we have encountered in grain industry property tax issues during the past year: 1. STORAGE CAPACITY Does the county have the correct figures regarding your storage capacity? Do you have bins which have been taken out of service because of structural issues? Are there bins which you can only partially fill because of structural issues? Take the initiative in informing your appraiser when these matters arise. The value of your facilities will be determined on a per bushel basis, and there is no reason to pay taxes on unusable space. 2. REPLACEMENT COST NEW In completing the Worksheet, the county appraiser will estimate the amount of money it would take to rebuild a substitute for your existing facilities. This number is itemized on the right column of the Worksheet and then aggregated in the Cost Reconciliation section of the Worksheet. Ask the county appraiser to show you the information used to calculate this amount and to step you through the application of this information. Check to be sure that the County has properly classified whether your various concrete bins are slip form or jump form. We recently had to explain the difference to a county appraiser. As you know, the construction method has a material impact on the calculation of the replacement cost and thus your tax bill. 3. AGES OF THE BINS The Worksheet will contain the county’s information regarding the years your various bins were constructed. A difference of even a few years can have a significant impact on your tax bill. You should also carefully review the calculations regarding the weighted average age of your bins. We are currently handling Winter 2018
15
KANSAS GRAIN AND FEED ASSOCIATION
an appeal in which the county incorrectly added the bushel-years of the bins and ended up with a weighted average age of 13 years less than the actual weighted average age. This miscalculation alone resulted in an overvaluation of more than $800,000. In a taxing district with a mill levy of 135, an $800,000 overvaluation results in an annual property tax bill which is $27,000 too high. You should also pay close attention to whether any adjustments have been made to the chronological age of your bins. We recently appealed a county’s valuation of grain storage and handling facilities in which the county’s retained fee appraiser arbitrarily reduced the chronological age of the bins by ten years to arrive at an “effective age.” While this may sometimes be an acceptable adjustment, the justification used by the appraiser was that a newer and faster exterior leg had been installed. He argued that this act alone extended the useful life of the concrete bins. Do not hesitate to challenge such illogical adjustments to the chronological age of your facilities. In that particular instance, the taxpayer rightfully questioned how the installation of a faster leg could possibly extend the useful life of the bins themselves. 4. NON-GRAIN ASSETS In addition to your grain storage assets, which include the elevator/ bins, legs, conveyors, and aeration systems, the County is also charged with valuing the non-grain improvements. These typically include office buildings or scale houses and storage warehouses. The County uses the Grain Elevator Appraisal Guide published by the Property Valuation Division of the Kansas Department of Revenue to value the grain storage 16
Grain and Feed Report
assets, but county appraisers are left to value the non-grain improvements on their own, as they would value any other commercial real estate. However, the Grain Elevator Appraisal Guide extracts the value of grain storage assets from the sales of economic units that include non-grain real estate. On average, the Guide attributes 80-85% of the value of the total economic unit to the grain storage assets, leaving only 15-20 percent of the total price for the non-grain improvements. We have seen many examples where counties’ non-grain improvement values are significantly out of line with those ratios. For example, if a grain elevator operation (including buildings, land, and grain storage assets) sold for $1 million, the Grain Elevator Appraisal Guide might attribute $850,000 to the elevator and bins, and only $150,000 to the remaining buildings and land. If the county appraiser is valuing those grain
assets at $850,000, using the Guide, but then also valuing the non-grain assets at an additional $500,000, using the county’s mass appraisal system for real estate, then the overall property is likely overvalued. Bottom line: if your non-grain improvement values are more than 15-20 percent of the total tax value for your facility, then your non-grain improvements may be overvalued. 5. PURCHASING FACILITIES When you purchase grain storage and handling facilities, a sales validation questionnaire must be accurately completed and submitted to the county at the time of the filing of the deed. Don’t leave the preparation of the sales validation questionnaire to the closing agent or to inexperienced counsel. The sales validation questionnaire will be the starting point for any subsequent valuation determinations by the county appraiser.
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
Take a look at the comparable sales listed in any of the recent Grain Elevator Appraisal Guides. You will see that few of the transactions reflected any amount paid for intangible assets, such as goodwill, as any part of the purchase price. 6. APPEALS Taxpayers may appeal their taxes at one of three times throughout the year. The first opportunity to appeal is in the spring when tax valuation notices are issued. Counties generally mail tax notices on or around March 1 of each year. Taxpayers have 30 days from the mailing date (not the date the notice is received), to file an equalization appeal. The mailing date can be found at the top of the notice. Forms and instructions to file these appeals are typically included with the notice. If you choose not to appeal in the spring, then you may pay your taxes under protest. First-half tax payments
are due on Dec. 20th each year. Forms for paying under protest can be obtained online or from your local county treasurer. If you choose not to appeal from the valuation notice in the spring, you forego paying the first-half taxes under protest, and if you have not paid your second-half taxes already, you may pay your second-half taxes under protest. Second-half taxes are due May 10 of the year following the tax year. So, 2017’s second-half taxes are due in May of 2018. Some caveats are important to note. You may only appeal your taxes once per tax year. If you choose to appeal in the spring, you must pursue that appeal to its conclusion. If you drop that appeal at any stage, you cannot have a second bite at the apple by paying your taxes under protest later.
Tax appeals typically consist of three levels: informal meetings with the county appraiser, small claims hearings before a designated hearing officer of the Board of Tax Appeals (for properties under a specified value threshold), and hearings before the regular division of the Board of Tax Appeals. Each year, we see taxpayers who file equalization appeals in the spring, don’t get the results that they want, but decline to pursue those appeals to the next level. Those clients contact attorneys like us in December and ask us to pursue their appeals as payments under protest, but further appeal is barred because those taxpayers already filed appeals earlier in the tax year. Do not make this mistake. If you begin one appeal process, you must see it through to the desired conclusion. If you drop the appeal or allow any deadlines to lapse, you have waived your right to any further appeals for that tax year. Kansas Grain and Feed Association has taken an active role in seeing that grain storage and handling facilities are not unfairly taxed, and its efforts to gain passage of legislation reining in rogue county appraisers have been a great benefit to the industry. However, it is up to you each year to examine the county’s information and valuation methodology to protect your rights. As with most areas of the law, there are many rules and regulations that govern tax appeals, including exceptions and nuances to the rules, dates, and deadlines discussed in this article. If you feel that your property is overvalued, consult with an attorney or other professional about your rights.
Winter 2018
17
KANSAS GRAIN AND FEED ASSOCIATION
MARK YOUR CALENDARS Grain Grading Schools KGFA and Kansas Grain Inspection Service will be offering valuable information to elevator operators, producers, brokers and grain buyers about grades and how to use grain standards in marketing during our 2018 Grain Grading Schools to be held February 20-22 (Topeka, Parsons, Wichita) and March 6-8 (Colby, Dodge City, Salina). Handson training will be given to recognize various types of kernel damage and samples will be graded to assist in practical, cost effective procedures for grain inspection. Register online at www.ksgrainandfeed.org/events today!
Feb. 20 - March 8 GRAIN GRADING SCHOOLS
Happy Trails Tom Tunnell Please save the date Friday, March 30, 2018 and plan to attend the retirement party for the one and only Tom Tunnell from 3:00 - 6:00 p.m., at Kansas Grain and Feed Association’s office. Tunnell is retiring and moving to Florida after nearly 40 years of excellence as KGFA’s president and CEO.
March 30 HAPPY TRAILS TOM TUNNELL
KGFA Annual Meeting Hospitality Suite Sponsors The KGFA Annual Meeting is slated for April 9-10 at the Wichita Marriott Hotel, Wichita, KS. On Monday evening April 9th we kick off the annual meeting with a prime rib dinner and directly following are member company hospitality receptions. Because we are at the Wichita Marriott this year, we do have some extra space for those companies interested in sponsoring a hospitality reception this year. If your company is interested, please contact Shari Bennett at (785) 234-0461 or shari@kansasag.org for more information.
Elevator Safety and Maintenance Workshops Employee safety and grain condition are directly correlated to a well-maintained elevator. This day-long training offers practical lessons in elevator maintenance. Attend to learn everything from the basics to new technologies.
John Cranor Memorial Golf Tournament Mark you calendar to attend. More information will be sent in June.
18
Grain and Feed Report
April 9-10 KGFA ANNUAL MEETING
May 1-3 ELEVATOR SAFETY
Aug. 5-6 JOHN CRANOR MEMORIAL GOLF
SERVING THE GRAIN HANDLING INDUSTRY IN KANSAS SINCE 1896
KEEPING YOU SAFE Published with permission from Grain Journal/Grainnet
Dangerous Wind Chill
Wind chill is the temperature it “feels like” outside based on the rate of heat loss from exposed skin caused by the effects of wind and cold.
Wind chill advisories are issued when the wind chill temperatures are potentially hazardous.
A wind chill warning is issued when wind chill temperatures are life threatening. Source: Joe Mlynek is president of Progressive Safety Services LLC, Gates Mills, The wind chill “feels like” temperature can freeze body tissue. OH; joe.mlynek@progressivesafety.us, and content creation The most susceptible parts are the extremities such as fingers, expert for Safety Made Simple Inc., Olathe, KS; joe@ safetymadesimple.com toes, earlobes, or the tip of the nose. As wind speed increases, the body is cooled at a faster rate, causing the skin temperature to drop.
Frostbite symptoms include the loss of feeling of an extremity and a white or pale skin appearance. For example, working in
an environment with twenty-mile-per-hour winds and an air temperature of zero degrees may cause frostbite to exposed skin within thirty minutes.
REMEMBER | Frostbite may be prevented by: Wearing layers of loose fitting, light weight, warm clothing Wearing outer garments that are tightly woven, water repellent and hooded Wearing a hat (40 percent of body heat is lost from the head) Covering the mouth to protect the lungs from extreme cold Staying dry and staying out of the wind
Winter 2018
19
Kansas Grain and Feed Association 816 SW Tyler, Suite 100 Topeka, Kansas 66612
Kansas Grain and Feed Association | Winter 2018 Editors Ron Seeber Tom Tunnell Randy Stookey Staci Storey Shahira Stafford Shari Bennett Samantha Tenpenny Mitzi Dodds Trae Green
Photography & Illustrations Cover Photo iStock.com/fotoguy22 Farmer with iPad iStock.com/doranjclark Grain Elevator iStock.com/Pulsmusic Ice Photo Photo by Scott Rodgerson on Unsplash Thermometer iStock.com/ktsimage
Remember »» Submit material for our next newsletter »» Register for Annual Meeting »» Take one of our many training courses.
Stay Connected